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FV

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Generally, identifiable assets acquired, liabilities assumed, and any non-controlling interest in the acquiree are measured at

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either have future benefits that arise from contractual or legal rights (e.g., trademarks, copyrights, franchise agreements, etc.) or are capable of being separately sold, transferred, licensed, rented, or exchanged (e.g., customer lists, databases, etc.).

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Intangible assets on the books of an acquired entity immediately before a business combination would be recognized by the acquiring entity if they

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if it is more likely than not that the contingency will give rise to a liability (or an asset).

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Noncontractual contingencies (contingencies that do not result from an existing contract), including lawsuits, are recognized only

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basically the price paid and whatever needs to be capitalized

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when it asks for how much of consideration it means

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not included

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Acquition costs are included or not included in a calculated loss/ gain for combinations

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The fair value of the investment by the acquiring entity and any noncontrolling interest in the acquired entity is greater than the fair value of the acquired entity's net assets.

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goodwill be recognized in a business combination when

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the investment value in the acquired entity is less than the fair value of the entity's net assets.

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A gain occurs in a business combination when

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when the fair value of the identifiable net assets acquired exceeds the fair value of the investment by the acquirer and any noncontrolling interest in the acquiree

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bargain purchase gain

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As a gain in earnings at the acquisition date.

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How should the acquirer recognize a bargain purchase in a business acquisition?

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I,II,III

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When a bargain purchase occurs in a business combination, which of the following types of information must be disclosed in the period of the combination? I. The amount of gain recognized. II. The income statement line item that includes the gain. III. A description of the basis for the bargain purchase amount.

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I,II,III

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When goodwill is recognized in a business combination, which of the following types of information about that goodwill must be disclosed? I. A quantitative description of the factors that make up the goodwill. II. The amount of goodwill that is expected to be deductible for tax purposes. III. The amount of goodwill allocated to each reportable segment.

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I,II

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Which of the following occurrences in a business combination, if any, identify circumstances that require extensive disclosures in the period of the combination? I. The existence of a noncontrolling interest. II. Achieving control in step acquisition.

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FV

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When the required acquisition method of accounting is used to record a business combination, all acquired assets and liabilities should be reported at

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remember

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When trying to find ending paid in capital you must deduct out issuance and registration costs after everything is calculated.

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ONLY Acquisitions (no mergers or combinations have the need)

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What legal forms of business combination will result in the need to prepare consolidated financial statements?

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The entity being considered for consolidation must be assessed to determine (1) if it is a variable-interest entity (VIE) and, if so, the primary beneficiary of the VIE, and (2) if the entity is not a VIE, whether or not an investor has equity ownership that enables it to exercise control of the investee.

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What gets consolidated if it is a subsidiary?

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Only one entity can be the primary beneficiary of a variable-interest entity.

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Variable interest entities:The primary beneficiary has the ability to direct the most significant economic activities of the variable-interest entity.

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If it is in legal bankruptcy, because it is under the control of the bankruptcy court and, therefore, not under the control of the parent.

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When does a subsidiary not have to be reported in the consolidated financial statements?

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yes

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Do you consolidate a sub that has a different year end

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A variable-interest entity is thinly capitalized(Cannot finance its activities without additional subordinated financial support). The risks and rewards associated with a variable-interest entity mostly accrue to the variable-interest holders. The value of a variable-interest entity depends on the net asset value of the variable-interest entity.

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Characteristics of a variable interest entity

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Not recognized. Under US GAAP contingent assets are recognized if the item meets the criteria of the definition of an asset.

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Under IFRS, contingent assets are or are not recognized?

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Business combinations 2 – Flashcards

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